If MPa/Pa = MPb/Pb and MRPa/Pa = MRPb/Pb > 1, this firm is: producing its output

Question

If MPa/Pa = MPb/Pb and MRPa/Pa = MRPb/Pb > 1, this firm is:

producing its output with the least costly combination of resources but is not producing the profit-maximizing output.

maximizing profits but failing to minimize costs.

neither maximizing profits nor minimizing costs.

combining resources a and b so as to minimize costs and maximize profits.

producing its output with the least costly combination of resources but is not producing the profit-maximizing output.

maximizing profits but failing to minimize costs.

neither maximizing profits nor minimizing costs.

combining resources a and b so as to minimize costs and maximize profits.

Explanation / Answer

If MPa/Pa = MPb/Pb and MRPa/Pa = MRPb/Pb > 1, this firm is:
combining resources a and b so as to minimize costs and maximize profits.
Because MPa/Pa = MPb/Pb, clearly the firms are combining to minimize cost and maximize profit. Eg. :- Merger prosposal of AT&T and Sprint.

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